In this post, we're going to highlight the most common types of fraud you need to know about. There are three main types of workers' comp insurance fraud, let's look at each one a bit more in depth.

Policy-related fake certificates of insurance

When it comes to workers' compensation fraud, employers aren't immune to trying to game the system. Generally, the biggest reason employers do this is to avoid paying premium fees on their insurance policy.

One common approach is creating fake certificates. Colorado workers' comp laws require that employers have a certificate of insurance that proves coverage. Creating a fake workers' comp cert is a big no-no, it both breaks the law and means you are providing fraudulent information to clients and employees.

Obviously, any fraud around workers' comp insurance is not only a bad idea, but it's also just not smart business practices. You can leave yourself — and the company — open to potential legal action which can end up costing a lot more than the initial fees you were trying to avoid.

Plus, it creates a negative working environment for your employees. Workers' compensation insurance is in place for both your, and your employees, protection so they can focus on getting their jobs done and not worry about injury or illness.

Claims related

Claims related frauds are typically tied to the employees of a business. These employees will fake an injury at work and then receive the benefits of workers' compensation claims.

Usually, these sorts of frauds will fall into one of two buckets:

The employee was slightly injured at work but then exaggerated the extent of the injury. For example, an employee might have slipped on an ice patch on the walkway and banged their knee. In reality, taking a sick day to rest and recuperate will be fine, but they might go to their doctor and claim they can't walk, resulting in a longer recuperation period that requires them to not work.

Another common route is the employee will claim an injury on the job, but it happened while they weren't at work at all. An employee might have gotten into a car accident taking their dog to the vet, but claimed it happened while they were delivering something for work and will need weeks to recover. In this case, they are taking advantage of workers' comp claims for something that happened on their own time.

Claims related frauds are some of the most common types you'll see. While most employees are honest about their injuries, it never hurts to get your facts in order when a claim gets filed. And make sure you never delay reporting a claim.

Medical related

Sometimes, workers' comp fraud is also committed by other providers, namely medical professionals. This type of fraud is very damaging and costs quite a bit too. Having so many people involved in fraud at once means a sophisticated system is at play.

With medical related fraud, a doctor is also actively participating. An employee might go to them about a relatively minor injury and the doctor can convince them to claim a more significant injury, which they will sign off on, in exchange for a cut of the worker's insurance benefits.

Here's one way to ease your fears about workers' compensation fraud: have your workers' compensation insurance up to date and ready to go.

That's where Cake can help. We're the experts when it comes to Colorado's workers' comp insurance policies. We can make sure you've got all of the information and documentation you need to stay on track.